Colorado lawmakers on Thursday introduced legislation that would establish a state-run plan for fair access to insurance claims for businesses and homeowners who cannot secure property coverage from private insurers.
The move comes as increased frequency of wildfires and other natural disasters in the state driven by climate change has put pressure on commercial and home insurance markets, according to House Bill 1288.
In the past five years, Colorado has experienced three of the largest wildfires in its history and the 2021 Marshall Fire resulted in the loss of more than 1,000 homes and commercial properties.
Under the bill, the governor would appoint a nine-member board by Jan. 1, 2024, which would have until July 1 to prepare and submit an operating plan to the insurance commissioner for the property insurer of last resort.
The FAIR plan would provide coverage limits of up to $5 million for commercial property owners and $1 million for homeowners who would have to show they cannot secure coverage in the private market, according to the bill.
The rates charged by the plan must be actuarially sound and “not excessive, inadequate or unfairly discriminatory.”
The plan would assess and share all expenses, income and losses among member insurers based on each insurer’s written premium in the state.